Backus Hospital reports boost in operating margin

Wednesday

Nov 20, 2013 at 8:32 PMNov 20, 2013 at 8:32 PM

By Adam Bensonabenson@norwichbulletin.com (860) 908-7004

NORWICH — The William W. Backus Hospital’s annual operating margin has more than doubled since 2010, with revenue over expenses equaling $25.4 million in fiscal year 2013, administrators announced on Wednesday.

Backus’ 9.2 percent operating margin in 2013 was just ahead of the 8.75 percent it reported in 2012, when total gross revenue for the 120-year-old hospital totaled $675.5 million, according to the state Office of Health Care Access.

“Our margin and our mission remain strong. Backus has made difficult but necessary decisions to maintain our position as a leader in health care transformation,” hospital board Chairman Anthony Joyce said during the nonprofit’s annual meeting. “Partnerships at every level have positioned Backus for these times.”

Joyce’s comments came five days after 20 senior and middle managers in Hartford HealthCare’s east region, which comprises Backus and Windham hospitals, received layoff notices.

Much of Wednesday’s annual meeting — which officials opened to reporters for the first time — focused on Backus’ summer affiliation with Hartford HealthCare, which company CEO Elliot Joseph called visionary.

“There’s a lot of noise in our industry, worse than any of us have ever seen in the past three decades, maybe longer. A lot of delivery systems have become frozen in place because of uncertainty about what the future will bring,” Joseph said. “But these two organizations never froze. We discovered that our vision is virtually the same, and that’s what began to build this partnership almost from day one.”

Joseph said the health care industry and hospitals in particular are facing major obstacles in areas that were traditionally reliable sources of revenue: Government reimbursements, cost shifting and a dependency on inpatient care.

Joseph said inpatient services have dropped by 4 percent over the last three years, forcing hospitals to find different ways of staying competitive while maintaining high standards of care.

“We’ve never seen that before, and what we’re seeing in states that are more advanced in this change, we’re seeing declines of 20 percent, 30 percent and more in some markets,” he said. “If you don’t dramatically steer in a different direction in anticipation of the impact on these changes, we will be a community without a hospital, for certain, so we’re moving.”

Backus President and CEO David Whitehead listed several accolades the hospital received in 2013, including being named a Top Performer on Key Quality Measures by The Joint Commission and receiving Blue Distinction recognition for orthopedics from Anthem Blue Cross.

But his proudest accomplishment, Whitehead said, was the establishment of 15-minute huddles every morning with clinical leaders across the Backus system.

“It is the single most important thing we do day in and day out to provide daily exceptional care to our patients. The huddle has allowed us to make rapid-cycle changes that address real issues. It’s a cultural transformation,” he said. “This is a people business, and I hope and trust that you all hope, that we never, ever allow that to change.”